With the growing start-up culture in India, government is also coming up with innovative ways to boost the entrepreneurs. Providing an efficient framework to bring together Start-Ups and SMEs seeking capital and investors capable of assuming the risks and challenges of investing in an early stage company can help hasten the growth of these enterprises and help them contribute towards the national economy. If the securities of a company were listed, it would give it better visibility and thereby wider reach to investors. With a structured market for investors, existing investors in an SME or a Start-Up are more likely to find an alternate buyer than if they search for a buyer using their own network of contacts in the investment community.
SEBI permits Small and Medium Enterprises (SMEs), including start-up companies, to list on the SME exchange without the requirement of making an initial public offer (IPO). However, participation is restricted to informed investors. This complements the existing SME platform, where listing can be achieved through an IPO with broader investor participation.
The possible eligibility routes include a minimum investment in the equity of the company by registered:
During the last 3 years, scheduled banks have considered receiving project financing or working capital financing as one of the eligibility routes. In addition to qualifying under any of these routes, the company should meet other conditions, including ensuring that neither itself nor its promoters and directors’ group companies, among others, are named in the wilful defaulters list on CIBIL. Furthermore, the company, its group companies, and subsidiaries should not have been referred to BIFR in the past 5 years, and there should be no regulatory actions against the company, promoters, or its directors in the past 5 years.
To maintain this platform exclusively for start-ups and SMEs, companies seeking to list on this platform must not be older than 10 years, must have revenues of more than ₹100 crores, and must have paid-up capital exceeding ₹25 crores.
Stock Exchanges would examine the compliance with the eligibility norms before permitting listing in this platform.
Corporate Governance and Continuous Disclosures
To maintain high standards of corporate practices, companies listed on this proposed platform will adhere to corporate governance norms applicable to both the SME exchange and the main board. As in the case of main board and SME exchange, such corporate governance norms would apply to a company with a paid up capital of 3 crore or above.
The proposal suggests keeping the following areas as continuous disclosure requirements.
What is NSE EMERGE?
EMERGE is a credible and efficient market place to bring about convergence of sophisticated investors and emerging corporates in the country. It offers opportunities to informed investors to invest in emerging businesses with exciting growth plans, innovative business models and commitment towards good governance and investor interest. It is a platform for the best of emerging corporate to raise capital from institutional investors and HNIs.
What can SMEs get from EMERGE?
To resolve your further queries regarding NSE EMERGE platform, you are free to contact Starters’ CFO. We can assist you in getting further information and available benefits of the listing platform.
Keep these steps in mind to get your listing done:
- Develop an understanding of the capital markets and the various processes involved in raising funds through an IPO
- Weigh the IPO option vis-à-vis other options of raising funds
- Once you choose to opt for the IPO route make a realistic assessment of your readiness for listing
- Start upgrading and strengthening your internal; processes and systems to meet the requirements of a publicly listed company
- Crystallise your project and capital raising plans
- Engage a merchant banker to assist you in the IPO process
What is BSE SME Platform?
Listed SMEs will enter the BSE SME Platform, opening doors to finance for growth and development.
BSE SME helps SMEs raise equity capital for growth, enabling them to expand into full-fledged companies. In due time enable them to migrate into the Main Board of BSE as per the existing rules and regulations.
BSE Ltd has set up the BSE SME Platform as per the rules and regulations laid down by SEBI. BSE SME Platform offers an entrepreneur and investor friendly environment, which enables the listing of SMEs from the unorganized sector scattered throughout India, into a regulated and organized sector.
This platform boosts SMEs and supports the nation’s economic growth. If you have any questions about this platform or its benefits, Starters’ CFO is here to help.
Requisites for listing on the platform
Please keep the following requirements in mind:
- Selection of Merchant Banker
- Restructuring of capital and valuation
- Offer Document as part of IPO
- Due Diligence as part of IPO
- Marketing Strategy
- Effective Communication of the corporate and its equity strength
Efforts taken by SEBI
The Securities and Exchange Board of India has made efforts to enable start-ups and SMEs to list on available platforms.
Therefore, we are confident that these significant platforms will provide emerging businesses with numerous benefits. The motive is to boost the economy and with such movements by NSE, BSE or SEBI, we can definitely expect better economic conditions for the country in future.